The proportion of incorporated property held in portfolios of landlords who use limited companies has more than doubled since Q1 2020.

Research by Pegasus Insight for Paragon Bank reveals that 12% of landlords use a mixture of individual and limited company ownership. Of those, an average of 76% of the portfolio, or 13.1 properties, were incorporated at the end of the third quarter of last year.

This is up from an average of 36% of portfolios, or 6.3 properties, that were incorporated in the first quarter of 2020 and nine properties during the same period in 2023.

Prevalent

According to the research, individual ownership remains the most prevalent structure, with 79% of landlords holding their portfolios in their own name. The remaining 9% is made up of landlords who have incorporated their entire portfolios.

Paragon explains that these figures represent the average across all portfolio sizes and that limited company ownership is more prevalent among landlords with larger portfolios. The research shows that just 7% of landlords with between one and three buy-to-let mortgaged properties have incorporated their entire portfolios. However, this increases to 28% among those with four or more.

Growing

Louisa Sedgwick, managing director for mortgages at Paragon Bank, says the trend towards holding properties in limited companies doesn’t seem to be slowing down. “In fact, these figures show that it’s actually growing amongst landlords who have found it can deliver benefits, particularly around how much their income is taxed,” she adds.

However, Sedgwick warns that incorporating portfolios won’t be the best move for all landlords. “We’d always recommend that they seek professional advice, typically from a tax adviser or accountant.”

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